UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549

---

FORM 10-Q

|(Mark One)                                                    |                                                                                         
|------------------------------------------------------------- | ----------------------------------------------------------------------------------------
|ý                                                             | Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 
|For the quarterly period ended March 31, 2004,
or            
|o                                                             | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|For the transition period
from                             to

Commission file number 1-16017

|ORIENT-EXPRESS HOTELS LTD.(Exact name of registrant as specified in its charter)
|--------------------------------------------------------------------------------

|Bermuda(State or other jurisdiction
of incorporation or organization) |                                                            | 98-0223493(I.R.S. Employer
Identification No.)
|--------------------------------------------------------------------- | ---------------------------------------------------------- | ----------------------------------------------
|                                                                      | 22 Victoria Street
P.O. Box HM 1179
Hamilton HMEX, Bermuda
|(Address of principal executive offices)            (Zip Code)       
|441-295-2244(Registrant's telephone number, including area code)     

Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past
90 days. Yes ý    No

Indicate by check mark whether the registrant is an accelerated filer (under Rule 12b-2 of the Exchange
Act). Yes ý    No

As of April 30, 2004, 31,790,601 Class A common shares and 20,503,877 Class B common shares of Orient-Express Hotels Ltd. were outstanding,
including 18,044,478 Class B shares owned by a subsidiary of Orient-Express Hotels Ltd. and 11,943,901 Class A shares and 2,459,399 Class B shares owned by Sea
Containers Ltd.



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PART IFINANCIAL INFORMATION

ITEM 1. Financial Statements

Orient-Express Hotels Ltd. and Subsidiaries    Consolidated Balance Sheets

|                                                                                        |                                                                             | March 31,
2004
(unaudited) |           | December 31,
2003 |    
|--------------------------------------------------------------------------------------- | --------------------------------------------------------------------------- | -------------------------- | --------- | ----------------- | ---
|
|Assets                                                                                  |                                                                             |                            |           |                   |    
|Cash and cash equivalents                                                               |                                                                             | $                          | 58,486    |                   | $  
|Accounts receivable, net of allowances of $956 and $976                                 |                                                                             |                            | 28,735    |                   |    
|Due from related parties                                                                |                                                                             |                            | 13,373    |                   |    
|Prepaid expenses and other                                                              |                                                                             |                            | 15,674    |                   |    
|Inventories                                                                             |                                                                             |                            | 26,263    |                   |    
|                                                                                        |                                                                             |                            |           |                   |    
|Total current assets                                                                    |                                                                             |                            | 142,531   |                   |    
|Property, plant and equipment, net of accumulated depreciation of $138,894 and $127,772 |                                                                             |                            | 827,505   |                   |    
|Investments                                                                             |                                                                             |                            | 147,463   |                   |    
|Goodwill                                                                                |                                                                             |                            | 29,529    |                   |    
|Other assets                                                                            |                                                                             |                            | 13,886    |                   |    
|                                                                                        |                                                                             |                            |           |                   |    
|                                                                                        |                                                                             | $                          | 1,160,914 |                   | $  
|                                                                                        |                                                                             |                            |           |                   |    
|Liabilities and Shareholders' Equity                                                    |                                                                             |                            |           |                   |    
|Working capital facilities                                                              |                                                                             | $                          | 54,497    |                   | $  
|Accounts payable                                                                        |                                                                             |                            | 18,812    |                   |    
|Due to related parties                                                                  |                                                                             |                            | 4,883     |                   |    
|Accrued liabilities                                                                     |                                                                             |                            | 38,194    |                   |    
|Deferred revenue                                                                        |                                                                             |                            | 22,721    |                   |    
|Current portion of long-term debt and capital leases.                                   |                                                                             |                            | 67,457    |                   |    
|                                                                                        |                                                                             |                            |           |                   |    
|Total current liabilities                                                               |                                                                             |                            | 206,564   |                   |    
|Long-term debt and obligations under capital leases                                     |                                                                             |                            | 439,891   |                   |    
|Deferred income taxes                                                                   |                                                                             |                            | 551       |                   |    
|                                                                                        |                                                                             |                            |           |                   |    
|                                                                                        |                                                                             |                            | 647,006   |                   |    
|                                                                                        |                                                                             |                            |           |                   |    
|Minority interest                                                                       |                                                                             |                            | 3,960     |                   |    
|                                                                                        |                                                                             |                            |           |                   |    
|Shareholders' equity:                                                                   |                                                                             |                            |           |                   |    
|                                                                                        | Preferred shares $0.01 par value (30,000,000 shares authorized, issued nil) |                            |           |                  |    
|                                                                                        | Class A common shares $0.01 par value (120,000,000 shares authorized):      |                            |           |                   |    
|                                                                                        |                                                                             | Issued31,790,601          |           |                   | 318
|                                                                                        | Class B common shares $0.01 par value (120,000,000 shares authorized):      |                            |           |                   |    
|                                                                                        |                                                                             | Issued20,503,877          |           |                   | 205
|Additional paid-in capital                                                              |                                                                             |                            | 278,821   |                   |    
|Retained earnings                                                                       |                                                                             |                            | 247,083   |                   |    
|Accumulated other comprehensive loss, net of income taxes                               |                                                                             |                            | (16,298   | )                 |    
|Less: reduction due to Class B common shares owned by a subsidiary18,044,478           |                                                                             |                            | (181      | )                 |    
|                                                                                        |                                                                             |                            |           |                   |    
|Total shareholders' equity                                                              |                                                                             |                            | 509,948   |                   |    
|                                                                                        |                                                                             |                            |           |                   |    
|Commitments and contingencies                                                           |                                                                             |                            |           |                   |    
|                                                                                        |                                                                             |                            |           |                   |    
|                                                                                        |                                                                             | $                          | 1,160,914 |                   | $  
|                                                                                        |                                                                             |                            |           |                   |    

See notes to consolidated financial statements.

2

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Orient-Express Hotels Ltd. and Subsidiaries    Statements of Consolidated Operations (unaudited)

|                                                           |                                     | Three months ended
March 31, |       
|---------------------------------------------------------- | ----------------------------------- | ---------------------------- | ------
|
|
|Revenue                                                    |                                     | $                            | 63,834
|                                                           |                                     |                              |       
|Expenses:                                                  |                                     |                              |       
|                                                           | Depreciation and amortization       |                              |       
|                                                           | Operating                           |                              |       
|                                                           | Selling, general and administrative |                              |       
|                                                           |                                     |                              |       
|Total expenses                                             |                                     |                              | 66,767
|                                                           |                                     |                              |       
|(Losses)/earnings from operations before net finance costs |                                     |                              | (2,933
|Interest expense, net                                      |                                     |                              | (5,044
|Interest and related income/(expense)                      |                                     |                              | 64    
|                                                           |                                     |                              |       
|Net finance costs                                          |                                     |                              | (4,980
|                                                           |                                     |                              |       
|Losses before income taxes                                 |                                     |                              | (7,913
|Benefit from income taxes                                  |                                     |                              | (1,012
|                                                           |                                     |                              |       
|Losses before earnings from unconsolidated companies       |                                     |                              | (6,901
|Earnings from unconsolidated companies                     |                                     |                              | 2,295 
|                                                           |                                     |                              |       
|Net losses                                                 |                                     | $                            | (4,606
|                                                           |                                     |                              |       
|Net losses per class A and class B common share:           |                                     |                              |       
|                                                           | Basic and diluted                   |                              | $     
|                                                           |                                     |                              |       
|Dividends per class A and class B common share             |                                     | $                            | 0.025 
|                                                           |                                     |                              |       

See
notes to consolidated financial statements including Note 1(j) regarding reclassification of earnings from unconsolidated companies.

3

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Orient-Express Hotels Ltd. and Subsidiaries    Statements of Consolidated Cash Flows (unaudited)

|                                                            |                                                                                   | Three months ended March 31,                                   |        
|----------------------------------------------------------- | --------------------------------------------------------------------------------- | -------------------------------------------------------------- | -------
|
|
|Cash flows from operating activities:                       |                                                                                   |                                                                |        
|                                                            | Net losses                                                                        |                                                                | $      
|                                                            |                                                                                   |                                                                |        
|                                                            | Adjustments to reconcile net losses to net cash provided by operating activities: |                                                                |        
|                                                            | Depreciation and amortization                                                     |                                                                |        
|                                                            | Undistributed earnings of affiliates                                              |                                                                |        
|                                                            | Other non-cash items                                                              |                                                                |        
|                                                            | Change in assets and liabilities net of effects from acquisition of subsidiaries: |                                                                |        
|                                                            |                                                                                   | Increase in receivables, prepaid expenses and other            |        
|                                                            |                                                                                   | Increase in inventories                                        |        
|                                                            |                                                                                   | Increase in payables, accrued liabilities and deferred revenue |        
|                                                            |                                                                                   |                                                                |        
|                                                            | Total adjustments                                                                 |                                                                |        
|                                                            |                                                                                   |                                                                |        
|Net cash provided by operating activities                   |                                                                                   |                                                                | 743    
|                                                            |                                                                                   |                                                                |        
|Cash flows from investing activities:                       |                                                                                   |                                                                |        
|                                                            | Capital expenditures                                                              |                                                                |        
|                                                            | Acquisitions and investments, net of cash acquired                                |                                                                |        
|                                                            | Proceeds from sale of fixed assets and other                                      |                                                                |        
|                                                            |                                                                                   |                                                                |        
|Net cash used in investing activities                       |                                                                                   |                                                                | (17,285
|                                                            |                                                                                   |                                                                |        
|Cash flows from financing activities:                       |                                                                                   |                                                                |        
|                                                            | Net proceeds from working capital facilities and redrawable loans                 |                                                                |        
|                                                            | Issuance of long-term debt                                                        |                                                                |        
|                                                            | Principal payments under long-term debt                                           |                                                                |        
|                                                            | Payment of common share dividends                                                 |                                                                |        
|                                                            |                                                                                   |                                                                |        
|Net cash (used in)/provided by financing activities.        |                                                                                   |                                                                | (6,247 
|                                                            |                                                                                   |                                                                |        
|Effect of exchange rate changes on cash and cash equivalent |                                                                                   |                                                                | (72    
|                                                            |                                                                                   |                                                                |        
|Net (decrease)/increase in cash and cash equivalents        |                                                                                   |                                                                | (22,861
|Cash and cash equivalents at beginning of period            |                                                                                   |                                                                | 81,347 
|                                                            |                                                                                   |                                                                |        
|Cash and cash equivalents at end of period                  |                                                                                   | $                                                              | 58,486 
|                                                            |                                                                                   |                                                                |        

See
notes to consolidated financial statements.

4

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Orient-Express Hotels Ltd. and Subsidiaries

Statements of Consolidated Shareholders' Equity (unaudited)

|(Dollars in thousands)     |                                            | Preferred
Shares
At Par
Value |   | Class A
Common
Shares
at Par
Value |   | Class B
Common
Shares
at Par
Value |   | Additional
Paid-In
Capital |     | Retained
Earnings |   | Accumulated
Other
Comprehensive
Loss |   | Common
Shares
Owned by
Subsidiary |         | Total
Comprehensive
Income/(Loss) |  
|-------------------------- | ------------------------------------------ | ----------------------------- | - | ---------------------------------- | - | ---------------------------------- | - | -------------------------- | --- | ----------------- | - | ------------------------------------ | - | --------------------------------- | ------- | --------------------------------- | -
|Balance, January 1, 2004   |                                            | $                             |  |                                    | $ | 318                                |   | $                          | 205 |                   | $ | 278,821                              |   | $                                 | 252,484 |                                   | $
|Dividends on common shares |                                            |                               |  |                                    |   |                                   |   |                            |    |                   |   |                                     |   |                                   | (795    | )                                 |  
|Comprehensive income:      |                                            |                               |   |                                    |   |                                    |   |                            |     |                   |   |                                      |   |                                   |         |                                   |  
|                           | Net losses on common shares for the period |                               |   |                                   |   |                                    |  |                            |     |                  |   |                                      |  |                                   |         | (4,606                            | )
|                           | Other comprehensive income                 |                               |   |                                   |   |                                    |  |                            |     |                  |   |                                      |  |                                   |         |                                  |  
|                           |                                            |                               |   |                                    |   |                                    |   |                            |     |                   |   |                                      |   |                                   |         |                                   |  
|                           |                                            |                               |   |                                    |   |                                    |   |                            |     |                   |   |                                      |   |                                   |         |                                   |  
|                           |                                            |                               |   |                                    |   |                                    |   |                            |     |                   |   |                                      |   |                                   |         |                                   |  
|Balance, March 31, 2004    |                                            | $                             |  |                                    | $ | 318                                |   | $                          | 205 |                   | $ | 278,821                              |   | $                                 | 247,083 |                                   | $
|                           |                                            |                               |   |                                    |   |                                    |   |                            |     |                   |   |                                      |   |                                   |         |                                   |  

See
notes to consolidated financial statements

5

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Orient-Express Hotels Ltd. and Subsidiaries        Notes to Consolidated Financial Statements

1. Basis of financial statement presentation

(a) Accounting policies

In
this report Orient-Express Hotels Ltd. is referred to as the "Company", and the Company and its subsidiaries are referred to collectively as "OEH". At March 31, 2004,
Sea Containers Ltd., a Bermuda company ("SCL"), owned 42% of the equity shares in the Company.

For
a description of significant accounting policies and basis of presentation, see Notes 1, 4 and 15 to the consolidated financial statements in the Company's 2003
Form 10-K annual report. As of March 31, 2004, these significant accounting policies have not changed from December 2003. "SFAS" means Statement of Financial
Accounting Standards and "FIN" means an accounting interpretation, both of the Financial Accounting Standards Board.

In
the opinion of management, all adjustments necessary for a fair statement of the results of operations for the three months ended March 31, 2004 and 2003, which are all of a
normal recurring nature, have been reflected in the information provided. Due to the seasonal nature of OEH's business, operating results for the interim period are not necessarily indicative of a
full year's operating results.

(b) Net losses per share

The
number of shares used in computing basic and diluted losses per share was as follows (in thousands):

Three months ended March 31,2004

2003Basic

34,250

30,800Effect of dilution



Diluted

34,250

30,800


For
the three months ended March 31, 2004 and 2003, the anti-dilutive effect of stock options on 102,261 and 279,307 class A common shares, respectively, was
excluded from the computation of diluted losses per share.

(c) Derivative financial instruments

For
the three months ended March 31, 2004 and 2003, the change in the fair market value of derivative instruments resulted in a charge of $260,000 and $83,000, respectively, to
other comprehensive income.

The
components of comprehensive income are as follows (dollars in thousands):

Three months ended March 31,2004

2003Net losses on common shares

$
(4,606
)
$
(2,608
)Foreign currency translation adjustments


3,165


(631
)Change in fair value of derivatives


(260
)

(83
)Comprehensive loss

$
(1,701
)
$
(3,322
)


6

---



(d) Goodwill

OEH's goodwill consists of $700,000 related to the trains and cruises reporting segment and $28,829,000 related to the hotels and restaurants reporting segment.
There were no changes in the carrying amount of goodwill for the three month period ended March 31, 2004.

(e) Stock-based compensation

OEH's compensation cost for share options is measured as the excess, if any, of the quoted market price of the Company's shares at the date of the grant over the
amount an employee must pay to acquire the shares, in accordance with the intrinsic value method under Accounting Principles Board Opinion No. 25. If compensation cost for the Company's stock
option plan had been determined based on fair values as of the date of grant, OEH's net losses and losses per share would have been reported as follows (dollars in thousands, except per share
amounts):

Three months ended March 31,2004

2003Net losses on common shares:As reported

$
(4,606
)
$
(2,608
)Deduct: Total stock-based employee compensation expense determined under fair value based method, net of related tax


(187
)

(237
)Pro forma

$
(4,793
)
$
(2,845
)Basic and diluted losses per share:As reported:Basic and diluted

$
(0.13
)
$
(0.08
)Pro forma:Basic and diluted

$
(0.14
)
$
(0.09
)


The
pro forma figures in the preceding tables may not be representative of pro forma amounts in future years.

(f) Dividends

On
March 19, 2004, the Company declared a dividend of $0.025 per common share payable April 20, 2004 to shareholders of record April 5, 2004.

7

---



(g) Pensions

Components
of net periodic pension benefit cost were as follows (dollars in thousands):

Three months ended March 31,2004

2003Service cost

$
208

$
128Interest cost


97


86Expected return on plan assets


(110
)

(67
)Amortization of prior service cost





2Amortization of net loss


35


20Net periodic benefit cost

$
230

$
169


As
reported in Note 7 to the financial statements in the Company's 2003 Form 10-K annual report, OEH expected to contribute $954,000 to its pension plans in
2004. As of March 31, 2004, $208,000 of contributions have been made. OEH anticipates contributing an additional $735,000 to fund its pension plans in 2004 for a total of $943,000.

(h) Earnings from unconsolidated companies

Earnings
from unconsolidated companies include OEH's share of the net earnings of its equity investments as well as interest income related to loans and advances to the equity investees
amounting to $1,929,000 and $1,661,000 for the three months ended March 31, 2004 and 2003, respectively.

(i) Recent accounting pronouncements

In
January 2003, the Financial Accounting Standards Board issued FIN No. 46 "Consolidation of Variable Interest Entities," as amended by FIN No. 46R which
applied immediately to variable interest entities created after January 31, 2003, and with respect to variable interest entities held before February 1, 2003, applied beginning with
OEH's quarter ended March 31, 2004. OEH has evaluated all of its existing joint-venture agreements, and has determined that none of its joint ventures are within the scope of
FIN No. 46R.

(j) Reclassifications

Certain
items in 2003 have been reclassified to conform to the 2004 presentation. Earnings from unconsolidated companies are now presented below earnings/(losses) from operations before
net finance costs.

2. Acquisitions and investments

On February 2, 2004, OEH entered into an agreement with the Pansea Hotel group, the owner of five deluxe hotels in Southeast Asia. Under this agreement,
OEH is to provide a maximum of $8,000,000 in loans to the hotel holding company which are convertible after three years into approximately 25% of the holding company's shares. As of March 31,
2004, OEH had provided $2,125,000 in loans to Pansea. In addition, OEH paid $1,400,000 for options exercisable after three to five years to acquire all of the holding company's shares, and the
existing shareholders have the right to sell their shares to OEH after five years. OEH is not managing the hotels but is marketing them along with its other properties.

8

---



On
April 25, 2003, OEH acquired a 50% interest in the Hotel Ritz in Madrid, Spain through a 50/50 joint venture with a Spanish real estate investment company. The purchase price
was $135,000,000, and each joint venture partner contributed $22,000,000 with the balance financed by working capital loans. Subsidiaries of the Company are obligated on $27,000,000 of these working
capital loans until the completion of various legal procedures in Spain, when the debt is expected to become entirely non-recourse to OEH. In addition to its interest in the hotel, OEH
acquired the exclusive long-term management contract of the hotel. This investment is accounted for under the equity method of accounting.

Summarized
financial data for OEH's unconsolidated companies for the periods during which the investments were held by OEH are as follows (dollars in thousands):

March 31,
2004

December 31,
2003Current assets

$
41,934

$
42,172Property, plant and equipment, net


277,335


279,298Other assets


4,343


4,472Total assets

$
323,612

$
325,942Current liabilities

$
44,576

$
43,538Long-term debt


141,551


144,251Other liabilities


74,122


71,351Total shareholders'equity


63,363


66,802Total liabilities and shareholders' equity

$
323,612

$
325,942


Three months ended March 31,2004

2003Revenue

$
28,652

$
20,301Earnings from operations before net finance costs

$
2,288

$
1,088Net losses

$
(1,867
)
$
(1,999
)


9

---



3. Property, plant and equipment

The major classes of property, plant and equipment are as follows (dollars in thousands):

March 31,
2004

December 31,
2003Freehold and leased land and buildings

$
684,792

$
678,683Machinery and equipment


133,746


135,584Fixtures, fittings and office equipment


131,337


119,191River cruiseship


16,524


16,571966,399


950,029Less: accumulated depreciation


(138,894
)

(127,772
)$
827,505

$
822,257


The
major classes of assets under capital leases are as follows (dollars in thousands):

March 31,
2004

December 31,
2003Land and buildings

$
13,478

$
14,080Machinery and equipment


1,996


1,964Fixtures, fittings and office equipment


4,623


4,22920,097


20,273Less: accumulated depreciation


(1,840
)

(1,626
)$
18,257

$
18,647


4. Long-term debt and obligations under capital lease

Long-term debt consists of the following (dollars in thousands):

March 31,
2004

December 31,
2003Loans from banks secured by property, plant and equipment payable over periods of 1 to 12 years, with a weighted average interest rate of 3.76% and 3.74%, respectively, primarily based on LIBOR

$
484,672

$
530,003Loan secured by a river cruiseship payable over 5 years, with a weighted average interest rate of 2.81% and 2.78%, respectively, based on LIBOR


2,500


3,000Obligations under capital lease


20,176


21,185507,348


554,188Less: current portion


67,457


51,271$
439,891

$
502,917


In
March 2004, the last guarantee by SCL of an OEH bank loan (December 31, 2003$19,088,000 principal amount) that predated the Company's initial public
offering in August 2000 was released and cancelled.

10

---



Certain
credit agreements of OEH have restrictive covenants. At March 31, 2004, OEH was in compliance with these covenants. OEH does not currently have any covenants in any of its
loan agreements which limit the payment of dividends.

The
following is a summary of the aggregate maturities of long-term debt, including obligations under capital lease, at March 31, 2004 (dollars in thousands):

Year ending
December 31,2005

$
37,5512006


107,4112007


97,5212008


152,9102009 and thereafter


44,498$
439,891


The
interest rates on substantially all of OEH's long-term debt are adjusted regularly to reflect current market rates. Accordingly, the carrying amounts of OEH's
long-term debt also approximate fair value.

5. Income taxes

The benefit from income taxes consists of the following (dollars in thousands):

Three months ended March 31, 2004Current

Deferred

TotalUnited States

$
176

$
185

$
361Other foreign


914


(2,287
)

(1,373
)$
1,090

$
(2,102
)
$
(1,012
)


Three months ended March 31, 2003Current

Deferred

TotalUnited States

$
380

$
127

$
507Other foreign


677


(1,681
)

(1,004
)$
1,057

$
(1,554
)
$
(497
)


The
Company is incorporated in Bermuda, which does not impose an income tax. OEH's effective tax rate is entirely due to the income taxes imposed by jurisdictions in which OEH conducts
business other than Bermuda.

11

---



Deferred
income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for
income tax purposes. The following represents OEH's net deferred tax liabilities (dollars in thousands):

March 31,
2004

December 31,
2003Gross deferred tax assets

$
73,590

$
71,467Less: Valuation allowance


(39,886
)

(39,886
)Net deferred tax assets


33,704


31,581Deferred tax liabilities


(34,255
)

(34,427
)Net deferred tax liabilities

$
(551
)
$
(2,846
)


The
deferred tax assets consist of tax loss carry forwards. In addition, at March 31, 2004, OEH has recorded a deferred tax asset of $691,000 (December 31,
2003$691,000) representing the future tax benefits of accrued pension costs recognized in other comprehensive income pursuant to SFAS No. 87, "Employers' Accounting for Pensions".
The deferred tax liabilities consist primarily of differences between the tax basis of depreciable assets and the adjusted basis as reflected in the financial statements.

6. Supplemental cash flow information

Three months ended March 31,2004

2003(Dollars in thousands)Cash paid for:Interest

$
5,537

$
4,721Income taxes

$
1,247

$
859


7. Accumulated other comprehensive loss

The accumulated balances for each component of other comprehensive loss are as follows (dollars in thousands):

March 31,
2004

December 31, 2003Foreign currency translation adjustments

$
(14,517
)
$
(17,682
)Net change on derivative financial instruments


(168
)

92Minimum pension liability, net of tax


(1,613
)

(1,613
)$
(16,298
)
$
(19,203
)


8. Commitments

Outstanding contracts to purchase fixed assets were approximately $7,800,000 at March 31, 2004 (December 31, 2003$11,200,000).

12

---



9. Information concerning financial reporting for segments and operations in different geographical areas

As reported in the Company's 2003 Form 10-K annual report, OEH has two reporting segments, (i) hotels and restaurants and
(ii) tourist trains and cruises. Financial information regarding these business segments is as follows, with net finance costs appearing net of capitalized interest and interest and related
income (dollars in thousands):

|                               |                            | Three months ended March 31,              |       
|------------------------------ | -------------------------- | ----------------------------------------- | ------
|
|Revenue:                       |                            |                                           |       
|                               | Hotels and restaurants     |                                           |       
|                               |                            | Owned hotels-Europe                       |       
|                               |                            | -North America                            |       
|                               |                            | -Rest of world                            |       
|                               |                            | Hotel management/part ownership interests |       
|                               |                            | Restaurants                               |       
|                               |                            |                                           |       
|                               |                            |                                           | 57,309
|                               | Tourist trains and cruises |                                           |       
|                               |                            |                                           |       
|                               |                            | $                                         | 63,834
|                               |                            |                                           |       
|Depreciation and amortization: |                            |                                           |       
|                               | Hotels and restaurants     |                                           |       
|                               |                            | Owned hotels-Europe                       |       
|                               |                            | -North America                            |       
|                               |                            | -Rest of world                            |       
|                               |                            | Restaurants                               |       
|                               |                            |                                           |       
|                               |                            |                                           | 6,119 
|                               | Tourist trains and cruises |                                           |       
|                               |                            |                                           |       
|                               |                            | $                                         | 6,955 
|                               |                            |                                           |       
|                               |                            |                                           |       

13

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|Earnings from operations before net finance costs:   |                            |                                           |        |        |        |        |       
|---------------------------------------------------- | -------------------------- | ----------------------------------------- | ------ | ------ | ------ | ------ | ------
|                                                     | Hotels and restaurants     |                                           |        |        |        |        |       
|                                                     |                            | Owned hotel-Europe                        |        | $      | (5,547 | )      | $     
|                                                     |                            | -North America                            |        |        | 2,756  |        |       
|                                                     |                            | -Rest of world                            |        |        | 3,632  |        |       
|                                                     |                            | Hotel management/part ownership interests |        |        | 1,323  |        |       
|                                                     |                            | Restaurants                               |        |        | 400    |        |       
|                                                     |                            |                                           |        |        |       
|                                                     |                            |                                           | 2,564  |        |        | 5,179  |       
|                                                     | Tourist trains and cruises |                                           |        | (1,690 | )      |        | (1,533
|                                                     |                            |                                           |        |        |       
|                                                     |                            |                                           | 874    |        |        | 3,646  |       
|Central selling, general and administrative costs    |                            |                                           | (3,807 | )      |        | (2,925 | )     
|                                                     |                            |                                           |        |        |       
|                                                     |                            |                                           | (2,933 | )      |        | 721    |       
|Net finance costs                                    |                            |                                           | (4,980 | )      |        | (4,971 | )     
|                                                     |                            |                                           |        |        |       
|Losses before income taxes                           |                            |                                           | (7,913 | )      |        | (4,250 | )     
|Benefit from income taxes                            |                            |                                           | (1,012 | )      |        | (497   | )     
|                                                     |                            |                                           |        |        |       
|Losses before earnings from unconsolidated companies |                            |                                           | (6,901 | )      |        | (3,753 | )     
|Earnings from unconsolidated companies               |                            |                                           | 2,295  |        |        | 1,145  |       
|                                                     |                            |                                           |        |        |       
|Net losses                                           |                            | $                                         | (4,606 | )      | $      | (2,608 | )     
|                                                     |                            |                                           |        |        |       
|Earnings from unconsolidated companies:              |                            |                                           |        |        |        |        |       
|                                                     | Hotels and restaurants     |                                           |        |        |        |        |       
|                                                     |                            | Hotel management/part ownership interests |        | $      | 1,594  |        | $     
|                                                     |                            | Restaurants                               |        |        | 103    |        |       
|                                                     |                            |                                           |        |        |       
|                                                     |                            |                                           | 1,697  |        |        | 1,055  |       
|                                                     | Tourist trains and cruises |                                           |        | 598    |        |        | 90    
|                                                     |                            |                                           |        |        |       
|                                                     |                            | $                                         | 2,295  |        | $      | 1,145  |       
|                                                     |                            |                                           |        |        |       
|Capital expenditure:                                 |                            |                                           |        |        |        |        |       
|                                                     | Hotels and restaurants     |                                           |        |        |        |        |       
|                                                     |                            | Owned hotels-Europe                       |        | $      | 7,521  |        | $     
|                                                     |                            | -North America                            |        |        | 2,455  |        |       
|                                                     |                            | -Rest of world                            |        |        | 3,235  |        |       
|                                                     |                            | Restaurants                               |        |        | 109    |        |       
|                                                     |                            | Hotel management/part ownership interests |        |        |       |        |       
|                                                     |                            |                                           |        |        |       
|                                                     |                            |                                           | 13,320 |        |        | 12,103 |       
|                                                     | Tourist trains and cruises |                                           |        | 444    |        |        | 505   
|                                                     |                            |                                           |        |        |       
|                                                     |                            | $                                         | 13,764 |        | $      | 12,608 |       
|                                                     |                            |                                           |        |        |       

14

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Financial
information regarding geographic areas based on the location of properties is as follows (dollars in thousands):

Three months ended March 31,2004

2003Revenue:Europe

$
17,136

$
16,444North America


24,615


24,124Rest of world


22,083


19,841$
63,834

$
60,409


10. Related party transactions

For the three months ended March 31, 2004, OEH paid subsidiaries of SCL $1,369,000 (2003$1,527,000) for the provision of various services
under a shared services agreement between OEH and SCL. These amounts have been settled in accordance with the shared services agreement and are included in selling, general and administrative
expenses.

OEH
guarantees a $3,000,000 bank loan to Eastern and Oriental Express Ltd. in which OEH has a minority shareholder interest. This guarantee was in place before December 31,
2002.

OEH
manages under a long-term contract the Charleston Place Hotel (accounted for under the equity method) and has made loans to the hotel-owning company. For the three months
ended March 31, 2004, OEH earned $860,000 (2003$892,000) in management fees which are recorded in revenue, and $1,929,000 (2003$1,661,000) in interest income on
partnership and other loans, which are recorded in earnings from unconsolidated companies.

OEH
manages under long-term contracts the Hotel Monasterio and the Machu Picchu Sanctuary Lodge owned by its 50/50 joint venture with local Peruvian interests, as well as the
50/50-owned PeruRail operation, and provides loans, guarantees and other credit accommodation to these joint ventures. In the three months ended March 31, 2004, OEH earned management and
guarantee fees of $451,000 (2003$226,000), which are recorded in revenue, and loan interest of $24,000 (2003$60,000) which are recorded in earnings from unconsolidated
companies from the joint ventures. At March 31, 2004, loans to the hotels aggregated $2,000,000, bear interest at a spread over LIBOR and come due in 2005. At the same date, OEH had a $750,000
subordinated loan to the PeruRail operation with an indefinite maturity date and interest also at a spread over LIBOR. All of the guarantees relating to the Company's investments in Peru were in place
prior to December 31, 2002.

OEH
manages under a long-term contract the Hotel Ritz in Madrid, Spain, in which OEH acquired a 50% interest on April 25, 2003 (see Note 2) and is accounted for
under the equity method. For the three months ended March 31, 2004, OEH earned $178,000 (2003$nil) in management fees which are included in revenue.

15

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ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Results of Operations

OEH's operating results for the three months ended March 31, 2004 and March 31, 2003, expressed as a percentage of revenue were as follows:

|                                            |                                     | Three months ended
March 31 |   
|------------------------------------------- | ----------------------------------- | --------------------------- | --
|
|
|Revenue:                                    |                                     |                             |   
|                                            | Hotels and restaurants              |                             | 90
|                                            | Tourist trains and cruises          |                             | 10
|                                            |                                     |                             |   
|                                            |                                     | 100                         |   
|Expenses:                                   |                                     |                             |   
|                                            | Depreciation and amortization       |                             | 11
|                                            | Operating                           |                             | 53
|                                            | Selling, general and administrative |                             | 41
|Net finance costs                           |                                     | 8                           |   
|                                            |                                     |                             |   
|Losses before income taxes                  |                                     | (13                         | ) 
|Benefit from income taxes                   |                                     | 2                           |   
|Earnings from unconsolidated companies      |                                     | 4                           |   
|                                            |                                     |                             |   
|Net losses as a percentage of total revenue |                                     | (7                          | ) 
|                                            |                                     |                             |   

The
earnings before interest, tax, depreciation and amortization ("EBITDA") of OEH's operations for the three months ended March 31, 2004 and 2003 are analyzed as follows (dollars
in millions):

|             |                            | Three months ended
March 31 |    
|------------ | -------------------------- | --------------------------- | ---
|
|EBITDA:      |                            |                             |    
|             | Hotels and restaurants     |                             |    
|             |                            | Owned hotels-Europe         |    
|             |                            | -North America              |    
|             |                            | -Rest of world              |    
|             |                            | Hotel management interests  |    
|             |                            | Restaurants                 |    
|             | Tourist trains and cruises |                             |    
|             | Central overheads          |                             |    
|             |                            |                             |    
|Total EBITDA |                            | $                           | 6.3
|             |                            |                             |    

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The
foregoing EBITDA reconciles to net losses as follows (dollars in millions):

|           |                               | Three months ended
March 31 |     
|---------- | ----------------------------- | --------------------------- | ----
|
|Net losses |                               | $                           | (4.6
|Add:       |                               |                             |     
|           | Depreciation and amortization |                             |     
|           | Net finance costs             |                             |     
|           |                               |                             |     
|           |                               |                             |     
|Deduct:    |                               |                             |     
|           | Benefit from income taxes     |                             |     
|           |                               |                             |     
|EBITDA     |                               | $                           | 6.3 
|           |                               |                             |     

Management
believes that EBITDA is a useful measure of operating performance, to help determine the ability to incur capital expenditure or service indebtedness, because it is not
affected by non-operating factors such as leverage and the historic cost of assets. EBITDA is also a financial measure commonly used in the hotel and leisure industry. However, EBITDA does
not represent cash flow from operations as defined by U.S. generally accepted accounting principles, is not necessarily indicative of cash available to fund all cash flow needs and should not be
considered as an alternative to earnings from operations under U.S. generally accepted accounting principles for purposes of evaluating results of operations.

17

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Operating
information for OEH's owned hotels for the three months ended March 31, 2004 and March 31, 2003 is as follows:

|                                | Three months ended
March 31 |     |  |     | 
|------------------------------- | --------------------------- | --- |  | --- | 
|
|Average Daily Rate (in dollars) |                             |     |  |     | 
|                                | Europe                      | 383 |  | 287 | 
|                                | North America               | 379 |  | 378 | 
|                                | Rest of the world           | 255 |  | 237 | 
|                                | Worldwide                   | 320 |  | 295 | 
|Rooms Sold (in thousands)       |                             |     |  |     | 
|                                | Europe                      | 16  |  | 23  | 
|                                | North America               | 34  |  | 35  | 
|                                | Rest of the world           | 47  |  | 47  | 
|                                |                             |     |  |     | 
|                                | Worldwide                   | 97  |  | 105 | 
|RevPAR (in dollars)             |                             |     |  |     | 
|                                | Europe                      | 173 |  | 127 | 
|                                | North America               | 243 |  | 260 | 
|                                | Rest of the world           | 145 |  | 126 | 
|                                | Worldwide                   | 182 |  | 162 | 

|                               |                   |  |     |  |     | Change % |   
|------------------------------ | ----------------- |  | --- |  | --- | -------- | --
|
|Same Store RevPAR (in dollars) |                   |  |     |  |     |          |   
|                               | Europe            |  | 171 |  | 108 |          | 12
|                               | North America     |  | 257 |  | 265 |          | -3
|                               | Rest of the world |  | 147 |  | 125 |          | 18
|                               | Worldwide         |  | 181 |  | 155 |          | 8 

Average
daily rate is the average amount achieved for the rooms sold. RevPAR is revenue per available room, that is the rooms department revenue divided by the number of available rooms
for each night of operation. Same store RevPAR is a comparison based on the operations of the same units in each period, such as by excluding the effect of any acquisitions or major refurbishments.

Three Months Ended March 31, 2004 Compared To Three Months Ended March 31, 2003

Overview

The net loss for the period was $4.6 million ($0.13 per common share) on revenue of $63.8 million, compared with a net loss of $2.6 million
($0.08 per common share) on revenue of $60.4 million in the prior year first quarter. The first quarter is a traditional loss making period because a number of OEH's properties are closed for
the winter, the Venice Simplon-Orient-Express train does not operate and tourist arrivals are low in locations with poor winter weather. In addition, in this year's first quarter two properties were
closed for major renovation: La Residencia in Mallorca, Spain and Bora Bora Lagoon Resort in Bora Bora, French Polynesia. Losses from euro-bloc properties translated into more U.S. dollars
than in the prior year because of significant weakness of the U.S. dollar against the euro, however, this effect is expected to reverse out in the profitable part of the year.

18

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Revenue

Total revenue increased by $3.4 million, or 6%, from $60.4 million in the three months ended March 31, 2003 to $63.8 million in the
three months ended March 31, 2004. Hotels and restaurants revenue increased by $2.9 million, or 5%, from $54.4 million in the three months ended March 31, 2003 to
$57.3 million in the three months ended March 31, 2004, and tourist trains and cruises increased by $0.5 million, or 8%, from $6.0 million for the three months ended
March 31, 2003 to $6.5 million for the three months ended March 31, 2004.

The
increase for hotels and restaurants was mainly due to an increase at OEH's owned hotels of $2.1 million, or 4%, from $49.3 million in the three months ended
March 31, 2003 to $51.4 million in the three months ended March 31, 2004. The revenue from restaurants increased by $0.8 million, or 20%, from $3.8 million in the
three months ended March 31, 2003 to $4.6 million in the three months ended March 31, 2004 which was mainly due to the '21' Club and revenue from La Cabana which opened in late
2003.

The
change in revenue at owned hotels is analyzed on a regional basis as follows:

Europe.Revenue decreased by $0.8 million, or 6%, from $12.6 million for the three months ended
March 31, 2003 to $11.8 million for the three months ended March 31, 2004. Excluding revenue from the Hotel Quinta do Lago (sold in November 2003), in the three months ended
March 31, 2004 revenue
increased by $0.8 million. Also during the three months ended March 31, 2004, La Residencia was closed for refurbishment. In the three months ended March 31, 2003 this hotel had
revenue of $1.1 million.

On
a same store basis, excluding the above, RevPAR in local currency declined by 4% but in U.S. dollars this translated into an increase of 12% as the euro was stronger against the
dollar in the first quarter of 2004 compared to the first quarter of 2003.

North America.Revenue increased by $0.2 million, or 1%, from $19.3 million in the three months ended
March 31, 2003 to $19.5 million in the three months ended March 31, 2004. Revenue at the Windsor Court Hotel declined by $0.8 million in the three months ending
March 31, 2004 compared to the three months ended March 31, 2003 due to the drop in citywide conventions in New Orleans by a third. Excluding this, revenue increased by
$1.0 million in the quarter. A significant contributor to this increase was from new rooms added at the Inn at Perry Cabin and Maroma Resort and Spa.

On
a same store basis, RevPAR declined by 3% which was driven by the Windsor Court referred to above. Excluding this, same store RevPAR increased by 6%.

Rest of the World.Revenue increased by $2.6 million, or 15%, from $17.4 million in the three months ended
March 31, 2003 to $20.0 million in the three months ended March 31, 2004. During the period, Bora Bora Lagoon Resort was closed for refurbishment. In the same period last year,
revenue from this hotel was $1.6 million.

The
RevPAR on a same store basis for the rest of the world region increased by 3% in local currencies in the three months ended March 31, 2004 compared to the three months ended
March 31, 2003. This translated to a 18% increase when expressed in U.S. dollars primarily as the South African rand and Australian dollar were significantly stronger against the U.S. dollar in
the period over the comparable period of 2003.

Depreciation and amortization

Depreciation and amortization increased by $1.5 million, or 27%, from $5.5 million in the three months ended March 31, 2003 to
$7.0 million in the three months ended March 31, 2004, primarily due

19

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to
the effect of acquisitions and capital expenditures in 2003 as well as the effect of the weakness of the U.S. dollar against currencies in which OEH records some of its assets.

Operating expenses

Operating expenses increased by $3.0 million, or 10%, from $30.8 million in the three months ended March 31, 2003 to $33.8 million in
the three months ended March 31, 2004, primarily due to the effect of the weakness of the U.S. dollar against currencies in which OEH incurs operating expenses.

Selling, general and administrative expenses

Selling, general and administrative expenses increased by $2.6 million, or 11%, from $23.4 million in the three months ended March 31, 2003
to $26.0 million in the three months ended March 31, 2004, mainly due to the effect of the weakness of the U.S. dollar against currencies in which OEH incurs these expenses.

Losses from operations before net finance costs

Losses from operations increased by $3.6 million from earnings of $0.7 million in the three months ended March 31, 2003 to a loss of
$2.9 million in the three months ended March 31, 2004, due to the factors described in the overview above.

Net finance costs

Net finance costs remained the same at $5.0 million in the three months ended March 31, 2003 compared to the three months ended March 31,
2004.

Benefit from income taxes

The benefit from income taxes increased by $0.5 million, from a benefit of $0.5 million in the three months ended March 31, 2003 to a benefit
of $1.0 million in the three months ended March 31, 2004. The Company is incorporated in Bermuda, which does not impose an income tax. Accordingly, the
entire income tax benefit was attributable to income tax credits incurred by subsidiaries operating in jurisdictions that impose an income tax. The increase was mainly due to the reduced profitability
of some of these subsidiaries.

Earnings from unconsolidated companies

Earnings from unconsolidated companies increased by $1.2 million, or 100% from $1.1 million in the three months ended March 31, 2003 to
$2.3 million in the three months ended March 31, 2004. This was mainly due to improved earnings from OEH's investments in Peru.

Net losses

Net losses increased by $2.0 million from a loss of $2.6 million in the three months ended March 31, 2003 to a loss of $4.6 million in
the three months ended March 31, 2004. Net losses represent losses from operations less net finance costs and benefit from income taxes.

Liquidity and Capital Resources

Working Capital

OEH had cash and cash equivalents of $58.5 million at March 31, 2004, $22.8 million less than the $81.3 million at December 31,
2003. At March 31, 2004 and December 31, 2003, the undrawn amounts available to OEH under its short-term lines of credit were $23.0 million and $35.8 million,
respectively.

20

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In
addition, at March 31, 2004 and December 31, 2003 there were undrawn amounts committed under long-term facilities of $31 million and $32 million,
respectively. OEH's total cash and availability at March 31, 2004 was $112.5 million including the undrawn short-term lines.

Current
assets less current liabilities, including the current portion of long-term debt, resulted in a working capital deficit of $64.0 million at March 31,
2004, a decrease in the working capital of $74.8 million from a surplus of $10.8 million at December 31, 2003. The overall decrease in working capital was comprised of the
following:



OEH's
business does not require the maintenance of significant inventories or receivables and, therefore, working capital is not regarded as the most appropriate measure of liquidity.

Cash Flow

Operating Activities.Net cash provided by operating activities decreased by $1.4 million from $2.1 million
cash surplus for the three months ended March 31, 2003 to $0.7 million for the three months ended March 31, 2004. Of the decrease, $2.0 million was attributable to reduced
earnings.

Investing Activities.Cash used in investing activities increased by $3.5 million to $17.3 million for the
three months ended March 31, 2004, compared to $13.8 million for the three months ended March 31, 2003.

Financing Activities.Cash used in financing activities for the three months ended March 31, 2004 was
$6.2 million compared to cash provided by financing activities of $13.2 million for the three months
ended March 31, 2003, a reduction of $19.4 million. In the three months ended March 31, 2004, OEH had proceeds from borrowings under long-term debt of
$0.1 million compared to proceeds of $15.3 million for the three months ended March 31, 2003.

Capital Commitments.There were $7.8 million of capital commitments outstanding as of March 31, 2004 mainly of
investments in owned hotels.

Indebtedness

At March 31, 2004, OEH had $507.3 million of long-term debt secured by assets ($448.9 million net of cash), including the current
portion, which is repayable over periods of one to 12 years with a weighted average interest rate of 3.76%. See Note 4 to the financial statements regarding the maturity of
long-term debt.

Approximately
45% of the outstanding principal was drawn in European euros and the balance primarily in U.S. dollars. At March 31, 2004, OEH had all its borrowings in floating
rates.

Liquidity

OEH expects to have available cash from operations and appropriate debt finance sufficient to fund its working capital requirements, capital expenditures,
acquisitions and debt service for the foreseeable future.

21

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Recent Accounting Pronouncements

As of March 31, 2004, the Company's significant accounting policies and estimates, which are described in Notes 1, 4, and 15 to the financial statements in
the Company's 2003 Form 10-K annual report, have not changed from December 31, 2003, except for the adoption of FIN No. 46R described in Note 1(i) to the
financial statements in this report.

Critical Accounting Policies

For a discussion of these, see under the heading "Critical Accounting Policies" in Item 7Management's Discussion and Analysis in the Company's 2003
Form 10-K annual report.

ITEM 3. Quantitative and Qualitative Disclosures about Market Risk

OEH is exposed to market risk from changes in interest rates and foreign currency exchange rates. These exposures are monitored and managed as part of OEH's
overall risk management program, which recognizes the unpredictability of financial markets and seeks to mitigate material adverse effects on consolidated earnings and cash flows. OEH does not hold
market rate sensitive financial instruments for trading purposes.

The
market risk relating to interest rates arises mainly from the financing activities of OEH. Earnings are affected by changes in interest rates on borrowings, principally based on U.S.
dollar LIBOR and EURIBOR, and on short-term cash investments. If interest rates increased by 10%, with all other variables held constant, annual net finance costs of OEH would have
increased by approximately $1.9 million on an annual basis based on borrowings at March 31, 2004. The interest rates on substantially all of OEH's long-term debt are adjusted
regularly to reflect current market rates. Accordingly, the carrying amounts approximate fair value.

The
market risk relating to foreign currencies and its effects have not changed materially during the first three months of 2004 from those described in the Company's 2003
Form 10-K annual report.

ITEM 4. Controls and Procedures

The Company's chief executive and financial officers have evaluated the effectiveness of the Company's disclosure controls and procedures (as defined in SEC
Rule 13a-15(e)) as of March 31, 2004 and found no material deficiencies or weaknesses. There have been no changes in the Company's internal control over financial reporting
(as defined in SEC Rule 13a-15(f)) during the first quarter of 2004 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over
financial reporting.

It
should be noted that any system of controls, however well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the system are met. In
addition, the design of any control system is based in part upon certain assumptions about the likelihood of future events. Because of these and other inherent limitations of control systems, there
can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

22

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PART IIOTHER INFORMATION

ITEM 6. Exhibits and Reports on Form 8-K

(a)    Exhibits.
The index to exhibits appears below, on the page immediately following the signature page to this report.

(b)    Reports
on Form 8-K. During the quarter for which this report is filed, the Company filed the following Form 8-K Current Report (other than the
exhibit to the report which was furnished to the Commission):

|Date of Report on Front Cover |  | Item No. |  | Description                                        
|----------------------------- |  | -------- |  | ---------------------------------------------------
|March 3, 2004                 |  | 7 and 12 |  | Year end 2003 earnings news release of the Company.

23

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.

|                    |  | ORIENT-EXPRESS HOTELS LTD.
|------------------- |  | --------------------------
|                    |  | By:                       
|Dated: May 11, 2004 |  |                           

24

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EXHIBIT INDEX

3.1        Memorandum of Association and Certificate of Incorporation of the Company, filed as Exhibit 3.1 to Amendment No. 2 to
the Company's Registration Statement on Form S-1 (Registration No. 333-12030) and incorporated herein by reference.

3.2        Bye-Laws
of the Company, filed as Exhibit 3.2 to Amendment No. 4 to the Company's Registration Statement on
Form S-1 (Registration No. 333-12030) and incorporated herein by reference.

31         Rule 13a-14(a)/15d-14(a)
Certifications.

32         Section 1350
Certification.

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